has been to clear, hold, and build and ultimately as we reach the transfer stage, we have to leave behind a more functioning society and economy, more resilient, constitutional, stable government that is capable of withstanding the radical taliban and other elements. one of my questions, madam chair, is going to be questioning the sustainability of the efforts. congress has appropriated over $60 billion for relief and reconstruction in afghanistan. the great majority of which has been channeled through private contractors. we know from experience in bosnia in the 1990's and more recently in iraq that a reduction in troop levels as

not mean a drop in contractor activity. in some cases, it is a matter of increase. there has been increase reliance on contractors to fulfill the logistical roles once performed by the military in those instances. eventually, the contractor presence will also decrease as we move support of large-scale off-budget scanned it -- spending to more direct to the afghan government directly. this is why our reconstruction strategy must focus on insuring that afghans can sustain what we have helped build. how many additional schools and health, as we can construct, but also that there are teachers and health care officials to sustain those institutions. whether afghans have the

resources and expertise to manage the long-term operation and maintenance of power plants. on a related note, as we encourage more contracting with local afghan firms under the afghan first policy, we must consider seriously revamping the process for vetting contractors to ensure they do not pose security risks. reconstruction is a critical component of our counter insurgency strategy, and dollars must never be diverted to support terrorists or in certain elements. that is one of the concerns i have as we go through this afghan first policy. we should have no illusions that afghan will be made -- that afghanistan will be immediately capable of standing alone. according to a world bank estimates, as many -- as much as 97% of afghan gdp is spent on military and military presence. that will not disappear with the drawdown of troops. reconstruction efforts must be focused on empowering afghans to regain control of their future. i look forward to the hearing today and specifically the discussion about reconstruction contracts, lessons we have

learned, and ongoing problems. thank you. >> let me introduce, if we could have both of our witnesses -- is it mr. hakki? would you mind taking a seat? did i pronounce it correctly? >> hakki. >> that will be easy for me to remember. let me introduce the two witnesses. larry walker is the president of louis berger group, an international consulting company that holds large contract with usaid in afghanistan. he is responsible for providing strategic direction for the firm for the successful completion of its programs. he oversees the development of strategic operating plans for each business unit and oversees

the implementation of company- wide initiatives. thank you for being here, mr. walker. mr. hakki is currently the chief executive officer of contract international inc., which holds millions of dollars of contracts in afghanistan. he has been responsible for overseeing operations of the u.s. headquarters office. his responsibilities include oversight of u.s. material procurement, engineering and quality control, shipping logistics' and monitoring of administrative personnel. he has been in the construction business for nearly 30 years. i look forward to both of you coming to that. i'm glad you're both here today and i look forward to your testimony. it is the custom of the committee to swear in all witnesses that come before us.

please stand and raise your right hand. do you swear the testimony will be the truth, the whole truth, and nothing but the truth, so help you god? thank you both. mr. walker? >> chairman mccaskill, members of the subcommittee, i am larry walker, president of the louis berger group. i appreciate the opportunity to provide perspectives on the highway project and our observations concerning reconstruction projects in afghanistan. it is an international consulting firm of approximately 3000 employees around the world. we provide expertise including engineering, program and construction management, and economic development services. many projects are carried out in some of the most challenging regions of the world. obg first began working in afghanistan in the 1970's and was one of the first to enter afghanistan after the september 11 attacks. i worked mainly with restructuring of the afghanistan infrastructure. we have provided nearly 40

house jobs to afghanistan people and trained thousands more. we have constructed more than 90 schools. the improved road network has dramatically decreased transit times, which has spread economic development along the road corridors and provided access to education and health care. i have traveled them myself and i can say that the work has improved the quality of life in afghanistan. the coast highway is a critical commercial link. the road provides reliable transportation throughout the border province to kabul. i want to say a few words about the circumstances surrounding

the reconstruction of the roads. as the picture shows, the topographical in geological features of this area where the work has occurred are some of the most challenging we have faced in afghanistan. the degraded security environment has made this the most dangerous project the company has attempted. we suffered 21 killed, 51 wounded, and four missing. security as a percentage of the overall project cost is around 30%. to compare other parts of afghanistan, the security costs averaged 8% to 10%. the project has experienced one of the 47 direct attacks, 108 direct ied's, and 40 other mine explosions. the lack of existing infrastructure and technical capacity, the need for capacity building, and the defacto war zone all work against measuring success, scopes schedule, and budget. for the afghan people, to protect the significant investment made by the tax pair

in america and other donors -- before the contract existed, the louis berger group provided training for subcontractors and employees and we continue to do so. this has been at the heart of our work for more than 40 years. the ultimate sustainability of many projects in afghanistan will generate enough revenue to provide the workers and materials that will be needed in order to maintain and sustain projects we and other companies have completed. the security environment increases the importance of communication between the contractor and the government. we have worked hard to communicate with the contract in officers, technical staff, as

well as u.s. military to address security related issues as they arise. the rich -- the group has helped to improve the physical, social infrastructure of afghanistan. most recently to discuss the recommendations found with the recent report. we support several of the commission recommendations including integrating contracts to expand and improve the qualifications and experience level of acquisition personnel, expanding competition requirements, and requiring oversight of contingency contract. lbg applauds the efforts of the commission and the subcommittee to improve the manner in which the united states towards an overseas contracts in complex environments. and the focus on sustainability of our reconstruction programs. we strive to deliver quality construction in a timely fashion. the company and our employees do this work because we have seen the tangible improvements in the lives of the afghan people that result from our work.

thank you. >> thank you, mr. walker. mr. hakki? >> i'm sorry? ok. chairman mccaskill, ranking member portman, distinguished members of the subcommittee -- on behalf of contract international, -- on behalf of contrack international, i applaud the reconstruction efforts in afghanistan over the past nine years. we share your interest in examining how the government can bring greater efficiency, transparency, and accountability to the construction contracting process. we believe these goals can help everyone deliver projects on schedule within budget and that are sustainable. contrack has operated since 1985 as a privately owned

corporation headquartered in mclean, virginia. i joined the company in 1994 as executive vice president and was appointed ceo in december of 2010. contrack operates out of egypt and afghanistan. would provide engineering procurement and prescription -- construction services as well as facilities operations and maintenance. our focus primarily is on military institutional -- military, institutional, and infrastructure projects throughout africa, the middle east, and central asia. over the past nine years, contrack has completed $1.5 billion worth of fast track design built projects in afghanistan for the u.s. army corps of engineers and the air

force. and working as a prime contractor, we have constructed brigades and usa coalition forces brigades, air fields, ammunition supply points, fuel storage and supply systems, forward-operating bases and other facilities. we are also awarded a contract to the permanent operation and maintenance services required to perform work on numerous ana rights and afghanistan. it is somewhat different than most contractors in that we self perform the majority of our work rather than acting purely as a construction manager. contrack has been a vital partner with the corps of engineers in accomplishing the mission statement to provide sustainable development projects for the afghan people that employ the populace and promote the future stability of afghanistan.

in order to utilize the local labor force, the majority of afghans must be trained in a skill. to accomplish this task order, contrack set up a training center to train and educate the afghans on a variety of construction trades. to date, we have graduated more than 3000 students, most of whom are still employed by contrack. as a prime contractor, we foster relationships with local firms so they can succeed. this requires ongoing training and guidance concerning u.s. technical and contractual requirements and obligations. under the challenges that we are still facing over there, we have contracting with foreign contractors. afghan and international contractors often received contracts which are more than they can handle.

many of them are not familiar with u.s. contract requirements. unfortunately, we share the perception and -- in the international community that there is an uneven playing field and that foreign contractors are not subject typically to the same standards as u.s. contractors. these include safety, ethics, bonding, requirements to establish workers protection in the interest of the u.s. government. we believe the corps of engineers has begun recognizing the risks in awarding projects to foreign firms based on low price only. for example, the government recently awarded a contract to 14 firms, all of which are american firms. future task holders will be competing among the 14 firms only. we appreciate the difficulties faced by the government and commend the professional manner in which so many contrack personnel perform their work in a hostile region. however, the for interpretation of core field staff have

treated challenges to the contractor and the government. for example, delays in resolving contract modifications due to government contracting officers and related personnel causes delays in payment to the contractors. similarly, high turnover of personnel in the field cause delays in the submission of the evaluations. quality at the job site is overseen by the qa representatives. they are experienced in other trades, but they lack sufficient training to understand and enforce technical requirements of the contract they are assigned to. lack of partnering between the contractor and the court is another unfortunate result of

the personnel turnover. contrack has participated in numerous partnering sessions with the corps. we believe these sessions have contributed the success of the projects in those regions. however, in nine years in afghanistan and after completing over 50 projects, we have had only one partnering session with the corps. the high turnover indicates the difficulty. this often causes delays to the project and cost overruns. sometimes the end users requirements are not always understood. for example, early part in projects -- the contractor and the facility and user would really help parties to achieve the end user design goals. transportation and logistics.

the high volume of cargo creates delays at the base entry patrol points. meanwhile, border politics can block or delay shipments of material at the project sites make matters even worse. working with the afghan ministries is a challenge. the afghans change procedure on a regular basis. require for tax exemption documentation, lack of stability, is further compounded by a staff that lacks cross training. new and constantly changing presidential decrees increase the risk environment. they can cause disruptions, delays, and safety problems. it will coordinated design must meet the general guidelines by the corps and address the end- user needs.

we were tasked to design and build main entry control points. we had designers on site to dig -- to agree on a design that satisfy everyone's requirements. this required a lengthy review process. all these efforts resulted in a successful project completed on time and on budget. i appreciate this opportunity to share our experience in afghanistan and would gladly answer any of your questions. >> thank you both very much. mr. walker, i want to talk a little bit about the road. i understand where the road is located and i understand the strategic planning that went into this particular road. but i am trying to figure out

whether or not someone along the way should have pulled the plug. let's talk about the initial price tag of the road. we are talking about now the highway, the highway that goes through rough territory, significant elevations, covered in snow in the winter, and frankly a very challenging highway project under the best of circumstances. clearly, very difficult under the circumstances, especially considering you are going through significant taliban real-estate. the initial price was $69 million. we are now up to $176 million for 64 miles of highway.

what went wrong in terms of the initial price tag for this highway? why are we barrelling towards three times as expensive as it originally was intended, and of that price tag, $43.5 million of that is security? what we are saying is, a third of the cost of building best are in fact security -- of building of this are in fact security. it no one had an idea that this

was the case before it began? >> when we started with the project, the incidents of violence were not as high as they were as we got into the project. the original estimate of security cost as a percent of the contract was around 12% as i recall. the challenge was, as we got into it, probably a year into it, the attacks began -- the attacks began to increase and the security began to deteriorate. at the time -- and we had worked on rose in afghanistan for many years -- at the time the project was initiated, there was no reason to assume that the security conditions would deteriorate the way they did, recognizing that the possibility always existed, in working over there -- and it is a very fluid, the volatile situation -- no one anticipated the level of attacks the project was going to sustain. >> who made the decision what the level of attacks would be? was that the military? it would not be hard to guess

that this would be significantly different just by the fact of where it is located. everyone knows -- frankly, the reason they wanted the road in the word -- the reason they want the roads in the first place was to clear out the hornet's nest of the taliban in the area. how was it misjudged by so much? >> i'm not sure it is a question of misjudgment. it might appear that way. the security in the country in general began to deteriorate. at the same time, when looking at security in afghanistan, it is not one single footprint. clearly the north and the west is a different security profile than the east and the south. when we began work on one road

in the south, for example, working in the same types of conditions as other roads in that area -- as a matter of fact, another extension of the road, we did not have nearly the security situation that developed later into the program. our historic experience was at certainly a serious level of security but not to the extent of what we are experiencing now. >> is a typical to have as many subcontractors as you have on the project? you would typically have 24 first-year -- first-tier subs, and more second-tier subs? >> of the 24 first-tier subs, they would typically be very small. >> give me an example. for 64 miles, you have 167 different subcontractors for 64 miles per what in the world are they for? >> you could have a small afghan subcontractor whose job would be clearing ditches of debris, and other afghan subcontractor who would build masonry walls on an approach to the bridge. you would have another subcontractor who would work on the -- work with the primary first-tier construction firm.

there are many small aspects of the construction project. one thing we wanted to encourage was the use of afghans as much as possible. >> how many of them are afghan companies? >> without looking at the list, i cannot say. i would guess it is the majority of them. >> we would love to get the exact number. >> we can get you that for the record. >> that would be very helpful. the money that was paid in security to folks, there is every indication that they are the bad guys. is this the reality, that america has to accept that in order for us to do things for the afghanistan people, that we have to pay the people that are killing us? >> i do not believe that is the case, certainly on this road.

with the security firm that we have, providing security on the firm, all of the local afghan security providers are placed into the military's biometric data system to check against the bad guy list. if someone were to turn up, the military would get back to us and say they have to be removed. >> mr. arafat? >> his information was put into the biometric database and there is no indication that he was a person of interest. as a matter of fact, a task force 2010 specifically told us that he was not on their list. >> he was fired? >> we were in consent to use him when the contract was withdrawn, so his employment was terminated. >> he was given $1 million a year?

>> no, he did not provide security as i understand it. his responsibility was to provide drivers and vehicles, which he did. the cost of those vehicles and drivers and fuel was $40 a day per vehicle. we compared that against similar charges for vehicles and that was consistent. the charge of those vehicles was, i believe, a little over $1 million. >> i have additional questions that i will ask in the next round, but i want to turn it over to senator portman. >> thank you, madam chair. i think the witnesses for being here today. -- i thank the witnesses for being here today. mr. walker, we should be forward looking, but there should be questions that should be asked. not so much with regard to the road, i have some questions about the falling on the chair's questions, but with regard to some of the over billing

practices and what kind of internal audits or other controls that had been put in place -- in november of last year, my understanding is that your firm receive the largest fine ever imposed on the contractor working in a war zone $18.7 million in criminal penalties and $15.6 million in civil penalties for overbilling. as part of that deferred prosecution agreement, your company admitted former executives submitted false, fictitious, and fraudulent overhead rates and correspondingly result in overpayment by the government in excess of $10 million. federal prosecutors charge that is in addition to that that -- what i want to ask today and give you a chance to respond to

is, what assurances can you give the committee that these kinds of abuses will not occur in the future with taxpayer dollars? have you improved in its internal audit controls? how often will you have reviews from outside accounting firms? >> in 2006 we noticed a problem in our overhead, and we initiated an internal review. in june of 2007 we initiated a refund to the u.s. government of $4.3 million. in august of 2007, the justice department let us know weaver under investigation and intervened with us at that point. -- let us know we were under investigation and intervened with us at that point. the result of the investigation -- let me take a half step back. we brought in an outside accounting firm to do a forensic analysis of what was going on in the overhead structure and we share that completely with the department of justice. what was determined was cost

that was associated with one overhead pool was in a properly moved to another overhead pool. that was u.s. government overseas work. that was wrong. that was absolutely wrong. in looking at that situation, recognizing that we had that problem, we worked with the department of justice to identify what the damages were to the united states government, and certainly welcome corp.. the individuals associated with that improper practice are no longer with the firm. we initiated a complete

restructuring. i took over the presidency of the firm to 0.5 years ago and initiated a complete restructuring of the controls, policies, and procedures of the company. i created a more robust compliance of ethics departments in the company. we put the entire company through training, the accounting department through many types of training. we put in place scores of new controls. we brought in yet another outside accounting firm to test those controls. it is one thing to have policies and procedures. it is another to make sure that they work. i brought in another independent accounting firm to

test us to see how we're doing because we need to make sure that not only does the policy control on paper but it exists in the policy of the company. we have been in the process. we are under a monitor, and we share everything of course with that monitor, all the training programs, all the testing to provide assurance that controls that are put in place protect the u.s. taxpayer. we have shared this from day one with justice department, with u.s. aid, many presentations, and we laid everything open and fair to make sure that everything was as transparent as we could possibly be in the situation. >> thank you. i am glad to have given you the opportunity to respond. obviously what this committee is concerned about is that -- is their ongoing efforts to have both internal and external reviews and through the monitor and other safeguards we want to be sure that, as i said earlier, this incredible expenditure of taxpayer funds is being properly spent given where we are in afghanistan and is all the more important. let's go to a specific project if we could that you discussed with the chair, and that is the 64-mile highway that has now

cost $121 million, final price tag expected to reach $2.8 million per mile, cost overruns as i look at this have now exceeded 100%. i do not know if that is accurate or not, but that is the way i read the numbers. in your testimony, you attributed this to the security environment and responded to questions about the security environment. i guess i would ask you a question in addition to the security issue. can you tell us what is the cost overrun excluding security costs? >> senator mccaskill, when you mentioned $69 million, let me clarify a little bit. that was our estimate of what we thought at the time it would cost to build that road. the construction cost. the bids that came in and the firm that won the contract was the low bidder, $85 billion or $86 billion.

that was the starting for us for construction of the road, not counting security or construction management. from our perspective, the construction starting point is about $85 billion, $86 billion. -- the total cost when you include security and management was about $27 million per the $85 million, $86 million at the start, the job will come in basically at that price. construction costs are not experiencing large overruns. the primary driver of these costs are security. it exceeded 30%. it has grown throughout the process. it grew to such a point that we are not in the security

business. we saw that the security costs continued to grow as a result of the security situation. so last year in one of the modifications to the contract -- without prodding by usaid, by our own volition, we told u.s. the id we would forgo profit on security moving forward -- which will usaid we would forgo profits on security with an forward. we are not interested in making a profit because of that type of a situation. so we voluntarily decided not to. >> my time is running out here. a chance for further questions in a moment, but if you could provide the subcommittee with the cost overrun data, that would be helpful. you said the primary driver of the costs are security related.

what we would be interested in knowing is which of those costs are not secured a related, understanding what you said about security and the fact that there is a change in the security environment in the country as a whole. if you could give us the data on cost overruns that are not security related -- if there are none, we want to hear that. if there are some, we want to hear what they are and why. because of the basis of the contract, being on a cost-plus basis, i assume there would be profit involved. we want to hear what those cost overruns are. thank you, sir. >> let's get an overview here. approximately how many different contracts does your company have in afghanistan, mr. walker? >> the largest one is iqc contractor that we hold. >> which is for all the highways? all the roles? -- all the roads?

>> not all the roads. under the irp contract, task orders -- i believe we have done four roads, if i am not mistaken. >> are there other types of projects that your company is doing? >> we have small projects were a subcontractor to some other firms, non-infrastructure -- we also have had a couple of small projects, but i do not think we have had any current and we have had a handful of those. >> mr. hakki, you indicated most of the work you have done has been under the aegis of working with the army corps for the military as it relates to

structures of the military police, the afghan national army, or the united states military. >> correct. >> have you done any projects that would be considered civilian infrastructure projects? electrical plants, health centers? schools? anything of that nature? >> no, we have not. >> let's talk about oversight. i was shocked in your testimony that you said in nine years you have had one meeting with the corps of engineers. how often is -- >> i was talking about the partnering, not normal regular meetings. >> partnering, like planning meetings? >> partnering, planning meetings where we have top executives from both end users where they meet for a whole day or perhaps two days.

>> and sustainability? >> and sustainability prefer that we have had only one in afghanistan. but as far as regular meetings with clients, we have those regularly. >> i understand. what about oversight on your end? mr. walker, how often does -- >> they definitely come in. one of these restrictions, research and for being able to move in the country, i have done quite a number of personnel who want to get out more than they are allowed to do. they do come to -- they do come out to the road. they're forced to travel under very restrictive security restrictions such as movement in and wraps --

they do get out to the road. >> what about the contract officers? do you all had very much contact with course? you're one of you? >> yes, we do. our projects are a lot different than louis berger project because of our projects are all inside the wire, inside the perimeter of the base, where most of the time the corps officers are there. >> do you think the corps is doing better job of oversight and then four or five years ago? >> yes, over the last nine years we have definitely seen improvement in all aspects. including the government turn over that you have just mentioned. most of them are now on one-year

rotations. we use to see people in 2003 on 60 days, 90-day rotations. now they're getting into one year. i think there is still room for improvement, that they can still increase that, but there is definitely improvement. >> let's talk about bribes. i spent some time in afghanistan. i am hopeful that either one of you will test us here at not acknowledge that bribes have been an essential part of us doing business in afghanistan, regardless of what we are doing. what can you tell the committee about bribes in the bribes that have been paid at various places and levels, whether it is under the aegis of security or other services that are needed by local folks that are used to getting their piece of the pie? >> i can tell you, we do not have any part of that whatsoever. we have a very strict company policy against bribes, and we'd just do not participate in that. on several locations, it costs

us delays. we have had to suffer because we did not agree to play that game. but we really do not. >> mr. walker? >> we have seen no evidence of our security personnel providing bribes. the casualties that we're taking would indicate that that is not something that we sponsor or that our security provides. >> i assume as the security costs went way up, the casualties went down? the casualties have remained at the same level even though security was increased in dramatic fashion? >> we have had -- for example, two weeks ago, two of our security personnel were kidnapped and taken to a local village and they executed them.

whether that happens two weeks ago or whether it might happen 30 days from now, we have to maintain a level of security. in ramping up the security, as far as those unknowns, we don't know what we may have prevented by adding better security footprint. what we do with our security profile is to create a security bubble and make that as airtight as possible so that the work can occur. when you work on from that bubble, you still have and the filtration -- and infiltration to play at in the case of the two generals -- gentleman that were kidnapped, they were on their way home and were kidnapped and executed. we have to maintain the level to allow us to get our work done. around three to four weeks ago, you're probably aware of the attack that occurred north of the road in which 36 construction workers were killed. they were trying to use a lower level of security, as i

understand it. the result was they could not withstand a serious assault. so how much is our security footprints deterrent from a serious assault like that? i do not know if we can answer that question. >> you cannot prove what you can prevent. i do not think either one of you would say that bribing is not a serious issue in afghanistan, right? you're not going to tell me that? >> it is definitely a serious issue. it happens on a daily basis. we get threatened. we get calls to give the bride, and if we do not, we face the consequences. like i said, we have been forced to suck it up and delay delivery, delayed normal procedures with the government simply because we are not playing the game. we are refusing to succumb to that. >> right. do you think we should have

built this road, mr. walker? >> a couple of years ago i reported -- a reporter for "the wall street journal," asked about a highway we constructed that has been under attack. he said it is under such an attack, was it worth building it in the first place? i said to him that they are attacking it because it is important. as we reach the transfer stage, we have to leave behind a more functioning society and economy, more resilient, constitutional, stable government that is capable of withstanding the radical taliban and other elements. we build a road to the province.

does the press contract we head. we need that would be bad. we get together with the military. we embedded ourselves. the accident the groundwork. we came back doing the asphalt work. there were no casualties. >> why did you do the same thing on this road? >> our experience working on roads in the area indicated that

it was not like -- >> once you figured out it was, why didn't you go back to the drawing board and do what you had done in the previous incident? >> senator, i think that is a great question, and my understanding with this hearing is getting to the lessons learned. going back to my opening statement, where i said we cannot just look at the metric of scope schedule budget, there comes a time when we probably should have stepped back and said, we have to change the scope, because we need to get the road and, but maybe there's a different way of getting it done. what ended up happening is we all went into a reactive mode. we had the security situation and had to increase the security of footprint to prevent that particular situation from happening again. from the lessons learned, we had to recognize how the security environment can change relatively quickly in the contingency environment like afghanistan. >> well, it is sad to me that we're just now talking about a lesson learned, because that lesson was learned many times in iraq, where the security environment changes and billions of dollars worth of

investment was blown to smithereens because the security environment changed. i guess what i would say is that it seems this is a long, long time that we have had lessons learned. it is so frustrating -- let me ask this last question, because my time is up. who is the person that you would see, mr. walker, that could have in this whole enterprise of building a highway, who is the person who should be held accountable for not changing the way i was being built in light of the security environment -- the way the highway was being built in light of the security environment changing, not within your company but within the government part of this, military or state department? who is the person who should set, "we have got to go back and do this differently"? >> i do not know if there is any one person, but it is important that we make sure that communication between the military, the client, ourselves

is always at its best. >> who can i blame? >> who can you blame? >> who can i blame for not changing it sooner. but can the american people look to to hold accountable for pouring tens upon tens upon millions of dollars into security not really sure where the money has ended up? who is it that i should ask to come in front of this committee to talk to about it? >> i am reasonably confident that we have maintained controls over the money that has gone to security. >> i should not have added that. i'm wanting to know who is the person -- if there isn't a person, that is the problem -- who is the person i should call to the committee, at your tax dollars that they saw getting out of control and said, "stop, we are putting way to much money into this project" -- who is

that person? >> i guess i would have to sit there is not one person that could be held to that standard. it is incumbent upon all of us to look if there is a different way -- >> if that happens with all of us, that means none of us, because we do not know who hold accountable and we have to figure that out. there has to be somebody in that organization who has primary responsibility and accountability for the projects at they are not sustained and end up costing way more that they should have cost and not achieving the objectives of the original project. thank you very much. senator portman. >> 3 questions. i would appreciate it if we could go through this quickly, because there is another panel right behind you that is already here with us. to mr. walker, giving you a chance to respond, you talked about the high weig -- highway under discussion today, and the security situation and the cost

overruns. let me give you a chance to respond to a report. at this comes from "the new york times" back in may. "despite the expense stretch of highway completed just six months ago, it is already falling apart and remains treacherous." number one, do you agree that parts of the high weight you have already constructed -- highway you have already constructed is deteriorating? if so, is here from paying for

repairs to the road -- your firm paying for repairs to the road, or is it usaid and the taxpayer picking up the tab? >> i absolutely disagree with the reporter's assessment. the reporter was referring to one particular crack on the road. if you have the photograph that i included with the opening statement and had it with you, you can look at it later, on the right-hand side of the photograph, you will see whether crack is. you'll also see a fall line that runs down the mountain -- a fault line that runs down the mountain. the crack was a result not of workmanship but of that fault. whether it is colorado, where i live, west regina, afghanistan, mountains move. -- west virginia, afghanistan, mountains move. i spoke to a geotechnical engineer who look at it, and it was a fault. >> will pay for the repair? >> in the case of a fault, it is maintenance repair. there is always an issue of

equality. we had a contractor pay for that when it is their responsibility. but when a mountain moves, it is not the responsibility of the contractor. it is a maintenance function. >> to both mr. walker and mr. hakki -- we're not going to leave you out totally here. after all, you have a degree from ohio university. >> i was hoping he would mention that. >> yeah, we are proud of that. let's talk about afghanistan first. as i said in my opening statement, this is a policy of a administration and i support it. buy afghan products, build afghan capacity. you address this a little bit in your opening statement with regard to the 3000 students you said graduated from a training course, and you say you have local firms engaged in retraining efforts. i would ask you both, how do we get afghans engaged in the sustainability i talked about in my opening statement?

this road, the next time there is a crack and you all are gone and we begin our withdrawal, who is going to fix it? can they afford it? do they have the technological capacity to do it? i would just like to hear from 1st, mr. hakki quickly, what are you doing exactly to ensure that there will be this ongoing support by retraining and developing this expertise, what are the challenges you see by this stated policy, the afghan first policy, and do you see any unintended consequences from that? i think mr. walker alluded to some of those earlier. if you could respond to that, mr. hakki. >> yes, senator portman. the afghan first program is not something we are very familiar with. that is limited to afghan companies. we know is there and has been fairly successful, but i really cannot comment on that, because

we have not really participated in that. that doesn't mean -- >> but the policy is to have contractors like you hire afghans. afghan companies, i believe, not us. >> the afghan first program is limited to afghan companies, if i am not mistaken. that doesn't mean we are excluding the afghans from our projects. like i said, we hire a lot of afghans in our projects, we train them -- >> but you do it just because it is a good idea and not because there is any direction in terms of the policy? >> correct. there is a clause in our contract that encourages engagement local labor and local companies, but it is not a requirement. we have taken that way over -- >> he would not have to do any hiring of afghan -- >> can actually speaking, at no -- contractually speaking, no.

>> that is interesting. >> the training center is that this is completely out of pocket. there was no government funding with the training center we developed. it was completely out of pocket, and we thought it was a great idea because it addresses senator mccaskill's concern with sustainability. the best way to sustain these projects after we leave afghanistan will be the training and education. the way we did is simple. we hired these students, believe it or not. we had to pay them like a daily allowance. we had to transport them and we had to give them, actually, like food while they are there. it is really peanuts. the costs were very little compared to the overall reconstruction process. in two-three weeks, we would graduate them with a simple -- maybe i can introduce this as part of the record is possible -- if it is possible -- but it is a simple certificate that states that this individual has been trained for two-three weeks

on a specific skill. it believes -- it really doesn't cost much, but it means the world to this individual, because it provides them security and a skill and a job he can use long after we leave. that is why it has been his successful, this whole program, for us. >> there must be some disconnect here between the work you have done, which sounds like successful in terms of moving toward not just using afghan subcontractors and labor, but also paying them for the future, and what my understanding was, which is that it shouldn't be something that is discretionary, but rather, part of a policy. we'll talk more with the government panel about that. mr. walker, any thoughts?

>> yes. under the was bircher auspices, we have a program where a 1500 kilometers of road are under active me to then sprayed with in developing capability of afghan firms and afghan employees -- under active maintenance. we have been developing a capability of afghan friends and afghan employees for years now. the deputy task force manager it is an afghan engineer. he can take that program over in another six months or maybe a year. the important point about that is that sustainability means funding. we have worked with the afghan government and the minister of public works and finance to establish a framework for road authority as well as a road find it.

the minister of finance indicated he feels it is very important in that roads can be funded, maintenance of roads can be found, through fuel taxes, something along those lines. this issue is not president karzai's desk on the decision of whether or not -- is now on president karzai's test on the decision on whether or not it goes to public works or presidential authority. having some foresight into will these roads be able to be maintained, i believe the answer is yes. the crack we talked about from the fault is being repaired by afghans under that task order, that maintenance task order. i think it is a real example of sustainable success in looking at sustainability and protecting the investment in the u.s. has made for roads. >> if i could have just one more quick question, and one important to get on the record. it has to do with it, in essence, what the chair asked earlier about, multiple subcontractors and gao has raised concern about this, use

of multiple tiers of subcontractors. they talk about concerns over project management, bedding, cost-control. i will focus on what area, what kind of contract. it seems we are creating the long economic incentives with the multimillion-dollar contracts are structured as cost-plus contracts. in that case, subcontractors earn more when it is up contractors spend more. -- when the subcontractor is spent more. he will be earning more when they spend more, rather than creating incentives for efficiency. other than having subcontractors -- subcontractors would profit from the waist at any level -- that waste at any

level. do you think we ought to change it? should we use the contracts more widely, and why would that be feasible in these reconstruction efforts? what kind of projects with

objection. a senator: mr. preside? the presiding officer: the senator from new jersey. mr. menendez: mr. president, i -- i regret that our colleagues have objected to consent to go to some of the most critical issues the country are facing, to have the finance committe meet on trade agreements that could expand markets and ultimately create jobs here in america, and that's what we need in america is

creating jobs. that on the question of whether there should be a limited use of force that the country and particularly the senate should spk and not being able to do that is pretty amazing to me. and so i hear a lot about wanting to get the people's work done but then i hear objections to trying to move on get the people's work done. it's a pretty -- pretty outrageous. mr. presiden i want to -- i came originally to the floor after this vote to thank president obama for yesterday calling and echoing my call to end subsidies for big oil. it's a call that received a bipartisan vote here in the sete, a bipartisan majority vote here in the senate, but, of course, did not pass.

did not as if because of our colleaguescolleagues' insistenca filister for a supermajority amount. but it's time that our friends on the other side of the aisle put the interests of taxpayers ahead of big oil and allow these wasteful subsidies to finally end. as the president said, we have strategies to reduce the deficit. like my legislation to cut oil subsidies that are already introduced and ready to go. and all we have to do is pass it. and a vote to allow that to happen is a simple choice for everyone in this chamber. are you on the side of working-class families and seniors? or are you on the side of big oil? now, there are lots of ways to cut the deficit, but saving taxpayer subsidies for big oil while ending medicare as wenow it and cutting student loans is not, in my mind, a solution. it makes no sense, mr. president, to give a taxpayer h. funde of it funded o

the big five oil companies earning huge profits a month, they're going to earn about $144 billion this profits thisear alone and say to families, oh, no, you have to sacrifice even more. now, those on the other side of the aisle would tell a middle-class student, whose family earns a medium family income of about a little over $50,000, that, no, you can't go to college. you can't get a pell grant from the federal government. but exxonmobil, a company that will earn $42.6 billion in profits this year, needs government assistance. and they will continue to come to this floor, look america in the eye, and say that that somehow is commonsense deficit reduction.

mr. president, there simply is no commonsense explanation for balancing the budget on the backs of working families and letting multibillion-dollar oil companies keep billions in taxper dollars. so, we have this dete about the deficit and how we deal with the debt ceiling, but we don't seem to want to have the shared sacrifice of having the special interests in this country, whether it is big oil or ethanol, which had a huge bipartisan vote here in the senate, that they shod not face any consequences but that, in fact, middle-class working families should. we all know that oil companies are among the largest, most profitable companies in the world. but somehow it's hard to understand the scale of their wealth, and i think this chart shows it very clearly. here's our choices. this is the medn incomeor families in this country.

this is big oil's profits. whose side are you on? whose side are you on? and you know it is about closing loopholes, which given the current budget climate, you would think that wre all for closing those loopholes. let me just give you one example of what one of those loopholes are. under the law as it exists today, we allow the big five oil companies to go to other countries in the world, to say to them, you know, tax us in a way that we can take that and ultimately reduce our obligation here in the u.s. so since u.s. taxpayers are taxed on their income worldwide but are entitled for a dollar-for-dollar tax credit for any income they p to a foreign governnt, which makes sense because you don't want to tax our companies twice, but u.s. oil and gas companies have very smart lawyers and accountants and they figured out that if you

go if a foreign government like i understand niece shah and you sty them, don't charge me a license fee, don't charge me a royalty, wheys we do here in the -- which is what we do here in the united states to permit these companies to explore on federal lands and waters for oil and gas, we charge them a royalty. no, they say to indonesia and other countries, charge me a tax. why? because then i can take all of that tanches which really is a license fee, but now pay it as a tax, and i can deduct it back here in the united states. so what does that mean, mr. president? that mns that american taxpayers are subsidizing foreign oil production. that's not in the national interests of the united states. it is not in the interest of taxpayers in the united states. and it isn't about shared sacrifice when we a talking about how to deal with deficit and debt in this country. and just closing that loophole

would close $6.5 billion to the treasury that could be put drail to deficit reduction. as matter of fact, i'm only talking about closing two loopholes for the big five oil mpanies who are going to make $144 billion in profit. just closing those two loopholes would save the u.s. taxpayer $21 billion over the next ten years. now, some of my friends on the other side of the aisle, they say, oh, well if you do that to those poor oil companies, they're just going to raise the price of gasoline. d that's simply not true. first of all, we're talking about $21 billion over ten years, or roughly $2 billion a year. so those poor oil companies, if they'd only make $142 billion in profits this year instead of $144 billion in profits this year, would not have to raise gas prices, because they're

making $142 billion a year, so they certainly don't need to raise gas prices. and we certainly don't need to incentivize their exploration because they're making record profits in this country. and in the world. they don't need us to incentivize them when they're making $144 billion in profits. so let's save the taxpayers that $21 billion. let's put it directly to deficit reduction. and only in washington -- only in washington would my republican friends suggest that stopping those subsidies to big oil is somehow going to be a tax increase. only in washington coul ending $21 billion in subsidies to the big five o companies -- we're not even talking about the independents who are goinindepeo make $144 billion in profits this year, that's somehow a tax

increase yet we'll take away pell grants or dramatically reduce them. we'll cut seniors under medicare, the poor under comairksd and that's okay. well, something is wrong with that vision of america. and dwrows back up mand just to back up my point that the argument is fell l schuss, you need to look no further than the beginnive report by the congressional research service that explains that it will not lower the production of oil and will not raise gasoline prices. so, mr. president, you drive up to the pump, you pay nearly $4 a gallon already, it has a real impact on your family, has a real impact on your income, has a real impact on your choices, has a real impact on food prices, has a real impact in so many way, and yet we're still supposed to give the oil companies another $21 billion in

tax breaks by the american taxpayer. it's time to stand up for the people's interest, not the special interests. it's time to end these tax breaks. it's time to put it as a revenue source into our challenges in terms of meeting our debt and dealing with our deficit. and our proposal would do exactly that. i don't know how you can look at the american people and look them in the eye and say, we're going to cut so many things that are going to affect your life, but on this issue, we're going to keep big oil whole. we're going to not touch a penny from their pockets. that's fundamentally wrong and the american people know it. with that, mr. president, i yield the floor. a senator: mr. president? i ask unanimous connt to enter into a colloquy with my republican colleagues for up to 30 minutes. the presiding officer: is there objection? without objection. a senator: thank you,

mr. chairman. mr. johnson: first of all, i would like to say i am very happy to hear that my democratic colleagues have agreed to allow us to come back next week and not continue on with the july 4th recess. it's important that we start work on the single-greatest issue, the single-most issue facing this nation, and that's our debt and deficit issue. so a couple minutes ago i objected to what the leadership wanted us to move to, which was an important debate on libya. t it is not addressing what we need to address. the fact of the matter is, in the senate this yea we've been here six months. we haven't passed a budget in that six months. as a matter of fact, we haven't passed a budget in the united states senate for over two years. we've missed all of the budget deadlines. we should have passed a budget by april 15. appropriations bills should have been completed by june 10. we're sumly not addressing -- we're simply not addressing the single-greatest issue facing

this country and the enact we're bankrupting america. of the six bills that have been -- only six bills have been passed inhe united states senate that have actually become law. three of those were cleaning up last year's business. they were continuing resolutions fundg the government when what should have happened a year ago is those bills should have already been passed. in president obama's budget that he sent over here in january, it was so unserious that it actually lost 0-97 in the united states senate. not a single democrat senator voted for that budget. we have an awful lot of work to do. our budget deficit this year, the highest estimate i've heard is about $1.65 trillion. we've incurred over $4 trillion in just the last three years. if anyone wants to understand why our economy is in a coma, it is exactly that.

people look to washington and they see how reckless, how out of control our spending is. as a former manufacturer, as somebody who has made investments, has created jobs, i realize when the federal government is spending so much money that it doesn't have, eventually the federal government is going to take. they're going to take in the form of higher taxes, possibly in the form of higher inflation, and the other thing that is overhanging this economy that is preventing job creation is the overregulation. i cannot tell you how many wisconsin business people come in a to our office and -- in to our office and are talking about that resolutio regulation or ths regulation that agencies are trying to impose on them. one of the things that's interesting abouthese regulations is they're not being implemented. just like the health care law. ov 3 million waivers have been granted. why is that? i belie it's because this administration actually understands that if they cleme

implemented the regulations, they understand exactly the harmful effect it would have on the economy, the harmful effect it would have on jo creation. the fact of the matter is this administration came into office with a tough situation, no doubt about it. but their actions passed through the health care larks the 1,600-page dodd-frank financial law, that has made the situation far harder and worse. i think the senator has had a few words to say. a senator: yes, thank you, senator johnson. i come down to the floor today in support of this movement. this movement is that we should be talking about what america says we should be tbawg, the debt. mr. paul: now, yesterday the president went on national television and chastised congress. he said to congress, and i quote, "members of congress need to cancel things." well, you know what?

i agree. i'm here today, tugh, mr. president. where are you? my understanding is the president is campaigning, h a fund-raiser in philadelphia tonight. i don't believe he's here tackling the nation's problems today. wcialtion he could send us the viceresident, but i don't think the vice president is either here. will i think he's in las vegas campaigning tonight. so the thing is it is a two-way streevment if he's going to go on national television and chasse us not for doing work, we're here saying, we want to be work on the nation's problems. we're here taking the nation's debt is a problem. his administration has said the number-one national security threat we face is the debt. where is the president? campaigning. we're here, mr. president. and weep we will have an offer. we don't want to raise the debt ceiling. we don't want more debt. but as republicans, for the good ofhe country, we're willing to raise the debt, but only -- and

i repeat, only if we have significant budgetary refm. we have to balance the budget by law, force congress to do it, by changing the constitution. it's the only way it will ever change. there is a pathology here. the pathology is that we do not have a sne. we are spineless and cannot do what it takes to cut the spending, and only we will get there if we change the constitution. so, mr. president, we are here. we are here. we welcome to you come back to town in between fund-raisers and talk about how we would fix this. but we would fix this by saying, yes, we will raise the debt ceiling, contingent upon a balanced budget amendment to the constitution. 75% of the public is in favor of saying you have to balance your budget. let's come back and discuss what the american people want. i comr johnson for leading this fight.

i think this is just the beginning. but i don't plan on saying we should go to any other subject until we've addressed the debt ceiling. mr. johnson: senator, i totally agree with you. senator rubio has a few words to add. mr. rubio: thank you, senator johnson. i too watched the president's lecture on television. my reaction is twofold. one is i'm disappointed. the other is i'm alarmed. first i'm disappointed because america does not have a tradition of class warfare. one of the thing that distinguishes us from the world is americans never believe you somehow have to take money from somebody else in order to be better off. on the contrary, we've always looked to advance the cause of everyone in the belief we can all be prosperous. that's the american tradition. that serves our nation well. you wouldn't know that from the speech yesterday, the rhetoric that, quite frankly, was deeply disappointing. the idea that if we raise texass

-- prays taxes on millionaires and billionaires that that somehow is going to make a difference in america's debin terms of having a real impact, is not only misleading; i think, quite frankly, it's disappointing. it's class warfare and the kind of language you'd expect from the leader of a third world country, not the president of the united states. but i'm also alarmed and worried about the speech because i think from it you can only take two things. either the preside doesn't truly understand the nature of the problems we face or he's decided this is a political issue, not a policy one. i say he perhaps doesn't understand the nature of the case because he mentioned the corporate jet tax six different times and yethe impact it would have is so insignificant that the white house is not able to give a dollar figure. that exact tax provision was part of the president's now infamous stimulus plan that passed in february of 2009. the bigger problem, though, is maybe the president fundamentally doesn't understand how jobs are created. politicians don't create jobs.

u.s. senators don't create jobs. senator johnson pointed out jobs are created by everyday people from all walks of life that start a business or expand an existing one. our job here in government is to make it easier for them to do that, not harder. threatening to raise taxes, threatening to wage class warfare does not accomplish that purpose. here's what i would suggest to the president. we have done this before as a people of america. people around here are in favor of tax reform. a simpler tax reform, a manageable and sane regulatory environment and a government that doesn't spend money it doesn't have. these things have worked before and they will work again. i urge the president to lead us in that direction. mr. johnson: thanks, senator rubio. i wanted to pick up on one point you made about class warfare. as a job creator myself for 31, 32 years, i know an awful lot about other entrepreneurs. i have to point out how incredibly disspiritting it is to have leaders here in washington attack you day in and day out, demonize you when all

you're trying to do is ma a good life for yourself, your family, provide sound employment for other americans. i need to point out that class warfare does not work. it does nothing to help improve our economy. senator lee. mr. lee: thank you, senator johnson. there is no shaourb that is more important -- no issue more important or pressing for the american people than this one where the g.d.p. ratio is about 95%. our economy can't long endure that kind of borrowing. it has an effect that will result in an estimated loss of about a million jobs a year for each year that we remain above the 90% of debt to g.d.p. ratio. we simply c't endure that. the american people can't endure it. we need to increase revenues. the only way we're going to increase revenues is to allow the economy to recover. that won't happen as long as we keep borrowing more and more money while doing nothing to control the underlying problem, the systemic problem that

requires a structural reform. the american people understandably, justifiably and very correctly are demanding that before we raise the nation's debt limit yet again, before we extend yet another credit card for the united states of america, we commit to some kind of cuts. future borrowing requires us to make future cuts. the problem with that is the moment that that debt is actually used up, the moment it's incurred, the american people are under an obligation. but if we phraeubg a promise today -- if we make a promise today tt we're going to cut, let's say $2 trillion or $3 trillion or $4 trillion over the next 10 or 12 or 14 or 15 years, that's a promise that we can't make. that's a promise that we can't really commit to because this congress, the one that sits right now, will not be the same congress that convenes in january of 2013 or on january of 2015 or in future years. we've got to make changes right now. and the only way that we can

commit to future cuts, to future structural reforms, the only way we can bind future congresses is by amending the u.s. constitution to change the way we spend money, limit spending as a percentage of g.d.p. and to require a supermajori to spend more than we have or to raise taxes. that's what we're demanding. we're willingo work, we're willg to come to the table on the debt limit. but we demand some kind of solution that will put us on course towards sanity. that's why we're here. mr. johnson: thanks, senator. senator ayotte. ms. ayotte: i want to thank my colleagues and i think those of you who are watchinghis will see that we are new senators back here in the back corner of the senate, and i can tell you as a new member of this chamber i'm deeply disappointed by the lack of work that we have been doing here in the united states senate. and the mority leader has put us in a position where we haven't been focusing on the

fiscal crisis that is facing our nation rig now. when you look at the fact that it's been 792 days since we've had a budget. and i was so excited as a new member of the budget committee to rollp my sleeves and get together to put together a responsible blueprint for this country; yet, unfortunately, we were told by the majority leader that would be foolish to put together a responsible blueprint for this country and to do the work of the budget committee. one of the reasons i came to the united states senate is i'm tired of business as usual. i know that my freshmen colleagues back here share that. and i'm the mother of two children. i know that the president mentioned his children yesterday. but if you care about your children and the future of this country, we owe it to our children to not continue to kic the canown the road. we should be in the united

states senate today and next week talking about how we are going to put together a blueprint that makes sure that we do not continue to borrow from countries like china, that we do not continue to enslave our children with the debt that is country is accumulating. and we know that if we do not address this, that the greatest country in the world will go bankrupt. and i, for one, want to follow through on the promise, the american promise that we have always made to the next generation, and that is that we will leave them with a better country. and that is so threatened right now with what is happening here in washington. that's why i share wh my colleague, senator johnson, i do not believe that we should be addressing anything next week but spending and debt, and we have the debt ceiling vote

coming up. so why aren't we rolling up our sleeves right now, mr. president, and working on a solution with real spending reforms,utting those handcuffs on congress that we know we need, like a balanced budget amendment, spending caps, a budget for our country so we don't continue to have this continuing resolution situation, one that reduces spending. we do not have a tax problem in this country. we have a spending problem. d we need to create a positive climate for our private sector and really do the hard work here in washington like our families do and live within our means. so i think next week we should be doing the work that needs to be don you know, mr. president, you called on us yesterday to work. we are here working. mr. president, the only blueprint, financial and fiscal

blueprint that you have offered, your budget for 2012, did not even get one vote from a member of your party in this chamber. that budget blueprint would have added another $14 trillion to our debt. so i say to our president, we're willing to roll up our sleeves and get to work with you to avert this looming fiscal cris, but where is your plan that's going to reduce spending and get us on a responsible fiscal path to preserve the greatest country in the world? mr. johnson: thanks, senator ayotte. senator vitter. mr. vitter: thank you, senator johnson. i'm honored to join you and all of our colleagues here to echo the same important message. everyone knows, everyone paying attention across the country knows that our greatest challenge is out-of-control spending and debt. everyone knows that we face a mountain crisis and an important

deadline in terms of the debt limit. and so when are we going to face these crucial issues? the top challenges we face as a country, when are we going to face them squarely, directly, constructively here on the floor of the u.s. senate? it's just that simple. let's get to the iortant matter at hand. let's debate in a constructive way. let's vote on proposals to curb spending and debt. yesterday we stood together under senator johnson's leadership and said just that, and we said we're going to block any effort to go into a recess or even aro forma session next week, july 4 recess. and we have done that. we have successfully blocked that recess. and we're going to do it because we need to roll up our sleeves. we need to go to wk, not go on vacation, about this crucial challenge of spending and debt. interestingly, president obama in many ways said the same thing

yesterday. and he chastised congress and said you need to go to work, not go on vacation to address this crucial issue. well, great, we've succeeded in canceling that recess. that's a first important step. but why are we continuing to try to move to every other issue under the sun except the biggest challenge our country faces? why don't we face this iue, debate it in a constructive way? senator reid, why don't you put measures on the floor that directly address this issue? with that in mind, those of us who joined together yesterday to block our july 4th recess have written senator reid a letter day, and i think it summarizes our point and our position very clearly, so i'll read it. 's not long. "dear leader reid, yesterday we came together to make it clear that we believe the senate should not go on vacation while

our country goes bankrupt. and we vow to block any recess or pro forma session next week. we're glad you've accepted that reality, but let's not be in session just to try to fool the american people into thinking the senate is working on the nati's fiscal crisis. let's actually begin a constructive debate on the biggest challenge our country faces: spending and debt. with that goal, we write to ask a few simple fundamental questions: when will you put serious bills on the floor to directly address spending and debt? the budget act of 1974 requires the senate budget committee to mark up a budget by april 15, and tomorrow will mark the 793rd day since the democratic-led senate has passed a budget, and the 11th week since missing that deadline this year. when will the budget committee meet to mark up a budget proposal? and when will you put such a

proposal on the floor? the american people want us to enact meaningful, effective spending caps. when will you put a spending cap bill on the senate floor? we clearly need the enforced discipline of a balanced budget constitutional amendment. this measure failed by a single vote last time it was debated on the floor of the u.s. senate. when will you p a balanced budget amendment on the senate floo mr. senator reid, we await your response and your leadership." again, mr. president, to summarize, we banded together yesterday and said as the country goes bankrupt, we shouldn't go on vacation. we're going to block any recess, any pro forma session next week, and we did. but we did it to turn to this challenge, to debate spending and debt in a constructive way, to have votes on that, not to continue to avoid the issue and turn to every other issue under the sun. and so, through the chair, i'd

again ask senator reid why don't we turn to this most important challenge of our country? please put serious bills on the senate floor that directly address spending and debt. let's get on with the people's work. mr. johnson: thanks, senator vitter. senator sessions. mr. sessions: thank you, senator johnson, and thank you for your leadership on this issue. as the ranking republican on the budget committee, i share my colleague's disappointment that we have not functioned. it's goodo see senator ayotte and senator johnson who are members of that committee. we worked hard to get prepared some weeks ago on the assumption that the united states senate would meet its statutorily required duty, and that is to produce a budget. i'm holding up title 2, united states code section 632, and it's the budget act, and it requireshat the congress

annually produce a budget. we have gone now 792 days, i guess, without a budget. it's the first line of the act is on or before april 15 of each year, congress shall complete action on the concurrent resolution on the budget, for the fiscal year beginning october 1 for the next fiscal year. ll, we haven't done that. it also said that we should meet by april 1. senator conrad, our budget chairman, our democratic chairman and able experienced -- an able, experienced chairman was prepared to go forward. it is pretty clear to me that the majority leader decided that we shouldn't have a budget process. last year, the budget committee produced a budget out of committee but the majority leader failed to bring it up for vote on the floor, and as the leader, he has the power to control that fact and was able to do so.

this year, he said it would be foolish to have a budget and basically we haven't even met in committee to have a budget. so we are facing the most serious, systemic debt crisis in our nation's history. the numbers are so serious and our path is so unacceptable that it is clearly the number-one issue in -- of our time. the chairman of president obama's debt commission gave us a written statement to the budget committee, said this nation has never faced a more predictable economic crisis. when asked when erskine bowles, president clinton's chief of staff said icould be two years, a little before, a little after. so i guess what i'm saying is that these individuals, particularly the ones that just

finished a campaign, traveled all over their state, talked to hundreds of thousands, millions of people in their state, got a feel for it. they are bringing new vitality and new insight into what's happening, and what's happening is nothing. six months have gone by and we have had not any hearings, we have had not any votes on the floor, we haven't seen any legislation. so i think that this is an acceptable method. i think it undermines the classic constitutional duty of congress to appropriate money, deal with taxes, it's our responsibility, and we have to ultimately be responsible for it, but have you observed mayors who say i'm not going to present a budget to city council, i'm going to let themecide?

do you see governors not present budgets to the state legislatures and then fight for what they believe in? look what's happened to governor christie, governor cuomo in new york, governor brown in california, governor bentley in alabama. it really helps to have that one single person ected to represent everybody provide some impetus, and it's astounding to me that we haven't seen that from the majority leader in the senate and from the president. he submitted a budget but then backed away from it. it went down 97-0 on the floor just a few weeks ago, but it was never seriously considered. what are we going to do? we're head to go a time when we may be asked within a few hours to vote on a monumental multicriminal dollar deal to raise the debt limit of the united states, and what will be

in it? will we really be changing the trajectory of our nation or will it be business as usual? we're not going to have tim to review it. that should be on the floor now. people should be standingp and casting votes right now. howhow much taxes do you want to increase? do you? which ones? how much do you want to cut, sessions? where. let'have the ve out here. that's what we should be doing. i think i wl help the american people understand how serious our fix is, what it's going to take to get out of it. it's much more serious and our problem is greater than most people realize. so i thank my colleagues for their good comments and the enthusiasm they have brought and the passion they have brought to this critical issue. mr. johnson: thanks, senator sessions. i will point out that business as usual here in washington is bankrupting america. senator demint. mr. demint: thank you, senator johnson. i'm glad our republican freshmen

did not get the memo that they were supposed to be seen but not heard. it's really exciting for this old, dusty establishment when the people who just walked in the door are the ones who are leading it, and so i -- i thank alof the freshmen who are sitting here. waington is addicted to spending, and the addict in chief is president obama. he has promised many times to quit, to quit spending, to live within our means, but he keeps falling off the wagon. and now for the fourth time since he has been president, he is asking congress to refill the bolt so that -- bottle so that he can keep spending, keep borrowing, keep increasing america's debt. members of congress, the senate, often brag about the fact that we have the power of the purse. part of that power is to pass laws to limit how much the administration can borrow. it's been a tradition.

both parties over the years have consistently blown tough that legal debt limit and increased it whenever we wanted another drink. the debt limit is supposed to be a stop sign to stop the administration from spending more thane can afford as a nation. instead, they have turned it into a green light where we can just speed through and continue to pour more and more debt onto our children. but now we have gone from it being just a wink and a nod where we brag about how much bacon we take home to we're at the point where we could seriously lose our nation. i think americans sense that everywhere. congressmen and politicians constantly exaggerate and cry wolf, but i think there is a sense all across america that goes beyond partisanship to real

worry. that's what i hear everywhere i go. people somehow intuitively know that if we have debt almost the size of our economy and projecting to even double that over the next ten years, that what they see on tv in greece and around the world are countries literally coming unglued could very well happen much quicker than we think here in the united states. we have got over $14 trillion in debt. we know the president's not serious about quitting this spending binge because the budget he sent us practical doubles that. and as we have gone through these last few months of talking about raising the debt limit once again, we have not gotten one proposal from the president to deal with this issue. he's played dozens of rounds of golf and had many, many fundraisers around the country, but he has been awol on this

issue. so not only has he added over over $3 trillion of debt since he became president, he has been missing in action when it comes to actually dealing with it. and his condescending speech yesterday that told congress to solve the problem ignored the fact that he was elected as presidt to lead, and yet he's not even following when it comes to this issue. we do have a spending addiction, and the only way that we're going to stop this and keep our country from going over the cliff is if we have a constitutional requirement that we have to stop spending more than we're borrowing. now, outside of washington, that doesn't sound like an extraordinary thing to say, but here last week, one of the democrat senators called me extreme for suggesting that we needed to balance our budget. american families have to do it,

businesses have to do it, 49 states have to do it, and sometimes it's painful, but we don't have to do it here. and the reason we have an unlimited government is that we have unlimited spending here in congress. we're at a point where we have to make a decision. we have obligated ourselves to borrow more money. we really don't have a good choice at this point, but if we're going to give the president more money to spend to meet obligations that he's already made, we have to make sure that this is the end of this spending addiction, and the only way for that to happen is if we in congress give the people of the united states and the 50 states the opportunity to decide for themselves if they want their federal government to have a balanced budget, and that's what our condition is. we will help the president deal with this debt ceiling, but he is going to have to agree with us and so will the democrat party that we're going to send

to the states a balanced budget amendment that the states can ratify, and five years after they ratify it, this federal government must be in balance. if we can't do that, if we can't make that commitment to the american people that we're going to stop this addiction, stop bankrupting our country, then we're going to have to go through the pain that we have caused ourselves along with this president when we don't raise that debt limit. we need the help of americans today because the people in congress do not have the will power to do what i just said. we need millions of americans to call us and email us and tell the president and tell members of congress that this debt limit should not be raised again ever unless we permanently solve this problem for the american people. the presiding officer: the senator has used the 30 minutes of the colloquy. mr. demint: i ask unanimous consent for two more minutes. the presiding officer: hearing

no objection, two minutes is granted. mr. demint: this is very little to ask this congress to do, to agree within the next six or eight years to do the hard work to balance our budget in return for giving the president more ahority to borrow more money. we owe it to the american people to let them decide for themselves, let the states ratify. this is a huge decision, and all we're asking our democrat colleagues to do is to let america decide if we should have a balanced budt, let america decide if it's really a radical, extreme idea that we live withi our means and stop spending more than we're bringing in. i know how america's going to answer that question, and that's why want to give them the chanceo answer it. mr. president, you have got the money you need to meet our obligations, but once and for all we need to mean what we say and stop spending this country into bankruptcy. thank you, mr. president, and i yield back. mr. joson: thank you, senator

demint, for your leadership on this issue. it is the most important issue facing this nation. i want to thank my colleagues for joining me here for the leadership they have sho as well. so with that, mr. president, i yield the floor. mr. bennet: mr. president? the presiding officer: the senator from colorado. mr. bennet: thank you, mr. president, and thank you for recognizing me. i'm pleased to be here today with my senior senator from colorado to talk about these important issues, and the first thing i wanted to talk about was the debt ceiling itself because people at home have -- have are asking me constantly, michael, what in the world is going on back there? we're dealing with our budget at the local lev, we're dealing with our budget at the state level, we're making choices that aren't popular and that aren't easy to make, but we're moving ahead, we're making decisions in our businesses, we're making decisions at home, we're moving ahead. what's wrong with washington, d.c.? part of the problem in this place is that people aren't just entitled, it seems, to their own

opinions. they are also entitled to their own set of facts, and i think when you're getting paid by the taxpayer, you have an obligation to actually not play with your own set of facts but to come out here and say, you know, what the facts really are. what the facts really are in the debt ceiling, the debt ceiling and the vote is that this is n a case of deciding you're sitting at the kitchen table and you're spending too much and so you're going to cut up your credit card. i would be for that. that's not what we're talking about here. these are about bills that have already been incurred by the united states. these are debts that are already owed by the united states. so what this is about is not cutting up your credit card, it's about sitting at home and saying you know what, i didn't budget very well last month, i didn't budget very well last year, and so even though i watched cable happily all year

long, i'm not going to pay my cable bill this month. i'm just not going to do it. even though i lived in this house all year, i'm not going to make my mortgage payment this month. i'm just not goingo do it. that's not fiscally responsible for a family to do, and it's not fiscally responsible for the federal government t do. at home if you do that, what you discover is that your mortgage rate goes through the roof because the bank says to you hey, michael bennet, you didn't pay your mortgage last month. and i'm not going to lend you money on the same terms that i lent you money before because you are a lousy risk. that is exactly what this is about. it's not about newú money. and i think it's importa for everybody to uerstand that, because if we don't raise the debt limit and we say to the creditors of thenited states,

you're not getting paid, not to mention our veterans and our seniors and the men and women that are fighting in afghanist afghanistan, buto our bondholders, you're not going to get paid, they're going to raise r interest rates. and every percentage incree in our interest rate is going to drive us $1.3 trillion more into debt so there are people coming out here saying it's the fiscally responsible thing to do noto raise the debt ceiling when we're going to have $1.3 trillion more of debt to pay and the interest on that debt. and nothing to show for it. now, it's not surprising to me that washington being washington, that there are people that see this as an opportunity to create leverage over things, to have a negotiation about the direction

of this country and i understand that. i understand that. i've felt for a very long time thate've got to get ahold of our deficit and our debt. we have a $1.5 trlion deficit. we've got almost $15 trillion of debt o our balance sheet, and i think we have a moral obligation not to constrain the choices of our kids and our grandkids. i've got three kids of my own that are 11, 10 and 6. one of them heard me say that during a town hall meeting and she followed me out to the sidewalk and she said, "daddy," and i said, what? this is care aline, the oldest. i said, "what?" she said, "just to be clear" -- she's making fun of me, mr. president, because i use that expression sometimes -- she said, "just to be clear, i'm not paying that back." which is the right attitude for her to have. and we need to be advocates for a caroline bennet and all the kids that are living across this country.

not just to be fiscally responsible, which we need to be, not just asking what we're going to cut, which w need to do, but also prioritizing what we're spending to make sure that we are maintaining the american dream, to make sure that we're honoring the legacy of our parents and grandparents and their parents and grandparents and honoring our national creed that it's our job, not as senators but as americans, to provide more opportunity, not less, to the people that are coming after us. and the debt and the deficit is a he piece of that. but you know what? it's not the only thing. i lay awake at night worrying about the fact that if -- i lie awake at night worrying about the fact that if you're poor in this country, it's hard for you to get a decent education. if you're born into a zip code that's defined by poverty in the united states, your chance of graduating with a college degree in the 21st century in the greatest country in the world are 9 in 100. that means 91 of you are

consigned to a future where you can't participate meaningfully in the democracy, you can't participate meaningfully in this economy. we need to deal with that. the fact that we have an economy that's not generating jobs, where median family income for the first time in our history, mr. president, is falling, not rising. people come into my town hall meetings and say, "i've done everything that i could do over the last decade but i'm earning less at the end than i was at the beginning." and saying to me, "you know, michael, we sent our first kid to the fancy school but we're not going to be able to send our second kid there." or "we can't send our kid to the best college that they got into." we need to be working on that. we have an energy policy in this country right now -- or maybe it's better to say a lack of an energy policy in this country right now -- that forces us to ship billions of dollars a week of our treasure to the persian

gulf to buy oil. that doesn't make any sense. i w on a call last week with farmers from my state that were saying to me, they are being driven out of business by the broken immigration policy that we have. now, i think the people at home are sick and tired of the screaming match. i think the people at home are sick and tired of the partisanship. i believe that people don't think it's going to address these issues. and i think they look at this deficit and debt situation and they say to themselves, this is su a reflection of incompetence that we are fearful to have a conversation about all the other things that we have to do for our kids and for our grandkids. their standard of what they want us to do is extremely clear to me. the senior senator from i are from the most beautiful state in the country but we're also proud of the fact that it's the third

democratic, a third republican and a third independe. and what i've taken out of the town hall meetings i've had is this. they want us to materially address this problem. they don't believe we're going to fix it all at once, and unfortunately they're right about that, but they want us to materially address it. they want to know that we're all in it together, that everybody ha some role to play in helping preserve choice and options for the next generation of amerins and to make sure that business understands that we're going to be good onhe accounts that we have. that's not washingtonspeak, though. th's coloradospeak. it's tougher around here. and they want it to be bipartisan because they don't believe in either party's "go it alone" approach on thi question. and i would add a coarl to all of -- a corollary to all of that which is that the capital markets need to be reassured that their paper is going to be worth what they paid -- what they've paid for it.

we need a comprehensive approach here. it's an approach that's going to require us to cut discretionary spending. it's an approach that's going to require us to reform our entitlement system. it's going to be an approach that's going to require to us do real tax reform in this place. and we're not great here at walking and chewing gum at the same time but that's what we need to start doing. these are comprehensive and complicated questions. no one would rather vote on something than i would that didn't raise any taxes. but the math doesn't work. and it's clear that at the end of the day for us to move ahead, we're going to have an agreement that has all of those aspects in it -- discretionary spending cuts, entitlement reform and tax reform. that's why when senator johanns and i, a republican here, circulated a letter to the fleas had those three -- letter to the president that had those three elements in it, 32 democrats and

32 republicans signed the letter agreeing that all of these elements -- the president of the senate signed the letter -- agreeing that all of these elements were going to be part of a final product here. so what i wanted to do this afternn was simply implore all of us to do our jobs, to get this behind us, to begin the building of america again in the 2 1st century, to make sure that we are not the first generation of americans to leave less opportunity, not more, to our kids and our grandkids. there's a lot more agreement behind closed doors in this place than there is out on the floor, and wa we need to bring e of that agreement out here. because if we fail to reach some conclusion before this debt limit vote and we unintentionally or intentionally end up in a place where we've turned our back on the debts

that we owe, we're not going to be able to solve this problem. the choices are going to make these look like easy choices. and so we're going home for a few days this weekend, the senior senator and i, to celebrate the 4th of july, independence day, to spend some times with our families and friends and our neighbors, and then we're coming back next week. and my hope is that everybody comes back -- everybody, on both sides -- with more of a seriousness of purpose than we've had, with an ability to see not just polital benefit but the benefit to the country of coming to agreement. if i can go home and say to people that we have reached a deal that meets the terms that i mentioned earlier, my view is th that would be perfectly fine in democratic parts of the state and in republican parts of thstate.

and that's what we should strive to do. i hope the american people will hold the people in this chamber accountable in the way they hold people at the local level and the state level accountable. no mayor would ever say, i'm going to willingly or wantonly jeopardize the credit rating of my city. the president of the senate was a mayor. and live to fight another day. and we shouldn't do that either. so i hope we move past the rhetoric of this debt ceiling discussion and actually into a conversation that will solve the fundamental problems and challenges that are facing our country. because if we don't do that, we're not going to be able to do the even more important work than that, which is to support the aspirations that all of us have for this country and for our children and a world that is becoming more complex and uncertain every single day. so i thank the senior senator from colorado for his incredible

leadership on these issues and i -- and i believe that if we just continue to try to reach out and continue to try to work together, that ultimately we're going to find a path. mr. president, i yield the floor. a senator: mr. president? the presiding officer: the senator from colorado. mr. udall: thank you, mr. president. i want to acknowledge the leadership of my colleague from colorado and particularly underline the salient points that he madeuring his remarks. i think mostmportant to note about colorado is we are a third republican, a third democratic and a third independent in our political and electoral makeup and i think it drives u to find bipartisan solutions and bipartisan ground. and that's why we came to the floor this afternoon, was to hope -- inhe hope that our colleagues from both sides of the aisle would join us in the discussion about how we move forward, not just on lifting the debt ceiling for the reasons that senator bennet outlined, but for the reasons that we think are as follows. we will lay a new foundation for

our 21st century economy. we will send a message to the markets and the business community that we're serious about dealing with our annual deficits and our long-term debt. and i think, in effect, in doing such, we will inject a healthy dose of confidence into our country, into our markets and into our business community. and that will -- and that -- taking those steps, this will be a way of moving forward, as senator bennet said. i'll ask unanimous consent to enter into a colloquy with my colleague, senator bennet. the presiding ofcer: without objection. mr. bennet: senator udall, one of the things that you said that has reminded me of a conversation i'd had a number of months ago with somebody who's in the capital markets and who watches everything going on down here prey closely but -- but quizically. he can't figure out what in the world we're doing.

and i saw him, i think it was maybe in february sometime, somewhere in that time frame, and i asked him, as i always do, what are you doing? us one of the smartest investors that i know. and he said, i'm buying gold. and i said, why are you buying gold? and he said, because i don't have any confidence that you guys are going to be able to work this out and -- and get our deficit and debt under control. first of all, think about how unproductive that is. i'm not telling people to buy or sell gold but it doesn't create jobs in this economy. what we want people is investing in companies so they can grow and hire people and -- and create jobs. anyway, i saw him again about six weeks ago and we started talking about the debt ceiling conversation, and he said, it is beyond the realm of my comprehension that you guys would fail to lift the debt ceiling. now, here's a guy, cynical enough about the way this place works, who is saying he's buying gold but it's even beyond his

comprehension that we could fail to lift the debt ceiling. and the reason for that is he actually understands what the facts are around this. but, you know, i think -- i think we will lift the debt ceiling. i certainly hope we will. but the more important point is what the senator has been working on for all these many months, which is coming to a comprehensive plan that actually addresses the underlying problem of our debt and our deficit so i thank the senator. mr. udall: my colleague and i, mr. president, hosted the capital conference, colorado capital conference two weeks ago, and we had coloradans from all sections of the state, all walks of life. we had the three main political points of view represented, democrats, independents, republicans, and they remarked to you, i know, senator bennet, and to me as well, after hearing from a broad range of our colleagues who were gracious enough to take time to speak to our constituents and answer questions, that we all identified the problem and we all had identified the solution,

which was a comprehensive plan that we implemented together. and we're here again on the floor this afternoon to call on all of our colleagues to join us in working together, finding that common ground. because there's a lot at stake but there's enormous opportunity. my colleague knows that. he's been a successful businessman in one of his previous lives. but you may want to comment on the capital conference as well. mr. bennet: yeah. and it is clear toe that if this decision wereeing left up to a hundred coloradans, we'd scratch our head and -- and we'd probably argue out some things but i think it would take about a day for us to come to a set of solutions that would solve the problem, or at least move us down the road, and we'd feel pretty patriotic about what we had done, that we had done something useful for our kids.

and at the end of this process, if we're able to deliver something like that, i think that's how we ought to feel. there are too many days around this place where i think we feel like we've lost sight of all of that. and this that conversation that you're talking about, al simpson was such a big part of, alice riff arrivlin, a number of peopt was abun did notly clear that you couldn't approach this problem by drawing bright lines and saying, no, you can't touch this or no you can't touch that. they knew everybody going have to give a little bit here in order make this wor and, unfortunately, some of that line-drawing is what we're seeing around here that we've got to find a way to get past. mr. udall: i would comment on two elements of what my colleague just alluded to. let's talk about sfnlgt there are those of us in our party who have said, keep your hands off

sfnlgt senator bennet and i know what a strong and important program socialecurity has been. it's allowed me and my wife to raise our children, and my parents were treated with dignity in their later years. but if you think that social security on paper is solvent, ought to think again. there's $3 trillion owed to the fund by the federal government. and, yes, social security isn't responsible for that shortfall because we've taken those dollars and put them into the general fund but that $3 trillion is going to have to come from somewhere. there's some commonsense fixes that we can put in place now that would protect and presearchedz strengthen sfnlgt on the other hand, we hear in the chamber that tax revenues -- or ref niewrks i should say, more aproptly, are off the table. every economist and every observer points out that you can't get there from here, there being a balanced federal budget.

ia can't we start, as the bowls simpson commission proposed, eliminating many of the subsidies and loopholes and special deals in our tax code that total something over $1 trillion? that's a great place to start. if you follow that with tax reform, lower rates for corporations and businesses, that's an even bigger step that we could taifnlgt i think there's broader agreement in the chamber, at least certain any our conversations, wi people across the country who represent their states. those are some commonsense steps forward. mr. bennet: we will, i completely agree. and why we wouldn't want to look at ouratory code. i hear about that from the other side. i share their view. listen, i was a school sciewpt for almost four years. if you think i don't understendd well-intentioned legislation from washington, d.c., that by the time it get to a school or classroom makes no cent all, believe me, i lived it ev single day. why wouldn't we look at our tax

code and regulatory code and ask ourselves, are these things more or less likely to drive innovation in the united states? are they more or less likely, these aspects of it, to grow our economy and create jobs in it is clear that we have the highest corporate tax rate in the world now. used to be second, but japan either changed theirs or is about to change theirs. and that's sending a very u competitive message to the world. on the other han we have some special interest loopholes that underlie the tax ce that we're not actually getting the revenue that we would be suggesting. it is the worst of all possible words because we're send out an anticompetite message to the world that says we're closed for business and we have a whole bunch of loopholes that may or may not and you suspect in many cases do not drive innation here in this country. in fact, most of them are

looking backward into the 20th century. they may haveade sense in the middle of the 20th century, but they don't necessarily make sense to build new industries here, to develop things like new energy economy that's so important to our state, which by the way would help lead us toward energy independence from the persian gulf. i mean, there's no reason to think that all these this that have been, you know, written down are written in stone and frany our job is to make sure that it' working better for people. so i thi the debt and deficit commission made some excellent recommendations on that side of thifnlings the other side is on personal iome tax. you know what they said there washings hey, we can actually lower rates and raise more revenue. why? because there are so many deductions that are part of the code and you know only 30% of the people in this country itemize, get the benefit of those deductions. you can imagine a world where

everybody gets the benefit of a lower rate but we're able to have revenue to drive us forward. we can get there. you know, the thing on the debt and deficit commission is that tom coburn, who's one of the most conservative members of this body -- i don't think he'd mind my saying that -- and dick durbin, one of the most liberal members of this body, both voted for that deficit and debt commission report. that's almt good enough for me. that's almost good enough for me. mr. udall: i was proud of the senate when five of the six senators on the commission voted for the bowls-simpson recommendations, not without some concerns, not without some interest in working to flush out the plan. but five of the six senators from across the political spectrum said this is a very good startingpoint. mr. bennet: i see we're joined by senator coons from delaware. and i'm going to stop. but, you know, just along that

line, just to giver people some optimism that are here in the chamber or that might be watching, just two weeks ago we took a vote on one subsidy, an ethanol subsidy. i think it was senator coburn and senator feinstein who put it on the floorks a democrat and a republican, and it got like 73 votes. i get in trouble with my kids. it wasn't "like" 73 votes. itas 73 votes -- to end that subsidy. and, by the way, there were i think around 40 democrats and 30-some republicans that supported that. we need more of that around here. and i think if we keep work at it, keep chipping away at it, we're going to be able to see in the end common schens actua senl actually prevail over politics. mr. udall: senator coons, would you care to share your

thoughts with the senate? mr. coons: mr. president, the two senators from colorado have, i think, inspired me to come to the floor and join them in a colloquy about the challenges facing our country. and to the senators from colorado, i am pleased and impressed with their leadership and have greatly enjoyed serving with them to date. i agree that the vote on one of our tax expenditures, on the ethanol subsidy, was an encourage and inspiring moment because we saw both democrats and republicans from all over th country casting a vote to end a tax expenditure, a subsidy, that many would argue has outlived its usefulness in the crentsz marketplace. in my home state we recently saw the bankruptcy of our second-largest poultry company. there are lots of folks on both sides of that particular gaivment i think the larger point that's important to get to

is certainty in the markets. i spent a number of years in the private sector, in business before running for and being elected to office. and i know the mantra that senator bennet is well-familiar with, senator udall is well-familiar with both parties are well-familiar with, is that certainty is what the markets look for. certainty is also what the people look for. i think we have alarmed them, concerned them by not being able to reach a broad, bipartisan, responsible plan that lays how the a framework for how it is we're gng to address both the nation's record deficits and record debt. our debt today, as you know, is roughly $14 trillion. our deficit has hit an all-time record and we're work on borrowed time. i've heard some suggest that we need to better understand the situation we're in. the situation we're in, i believe, is that we are about to risk defaulting on america's mortgage. we've made commitments as a tion. we've expended ourselves at home

and abroad in a lot of different ways, and i'm worried that we are on the verge of failing to meet our commitments, just as america' households really hesitate before ever defaulting on their mortgage, i think we as a nation, as a people, have to hesitate, have to think deeply about the consequences of it. i asked the folksho work with me on economic policy to quantify it. they looked at a number of different studies around the country and gave me some chilling numbers. should we fail to meethe a august 2nd deadline that secretary geithneras rachettedly since january in writing and -- repeatedly since january in writing and in testimony told us is the last date by which we can reach a bipartisan compromise and a way forward, we'll lose hundreds of thousands of jobs. the markets may lose a much as 10% of their value, which would mean loss of almost $1 trillion of market equity value. that means that pension funds,

401(k)'s, personal savings would take an enormous hit. the average homeowner would see an increase in the costs of whether it is their credit cards, or mortgages, or car loans. it is easy to think this is an abstract problem. but in reality, i think the problem that we're causing, the lack of confidence in the markets could have a sudden, sharp, grinding effect on our economic world. and that's because investors act more like animals than they do like machines. and when spooked, they act the way herds do and they run off in a certain direction. and my concern is that we are so used as a country to have a aaa bond rating to being the world's reserve currency, to being the gold standard for the most safe and most secure investment. i am gravely concerned that intransigence, an unwillingness to come to a reasonable compromise is putting us at real risk of putting our rating at

risk as a country. at the end of the day, i've observed some things about how washington works so far that really worry me. if i could offer a metaphor, it seems to me ere is a lot of sacred cows here. it seems to me that the trillions of dollars that we spend in our tax code through fax loopholes and special tax provisions and the trillions that we spend through direct spending are broken up into these sacred cows, and i feel as if i've gone into dairy. i feel as if i'm surrondessed by a whole herd of sacred cows and what we need is a deliberate and cleareyed bipartisan effort to thin the herd here, to make some tough choices. as i know the senator bennet said previously, i want t commend the hard work of the gang of circumstance the so-called gang of six, the gang that came up with the processes and a way forward, the bowls

simpson commission that presented to us a proposal. there are paths forward. there are ways to make these tough choices. i hope that before the time runs out that this body will embrace these proposals, make t tough choices and the sacrifices we need to, come to the center, and lay out a path. i frankly don't think we've got until august 2. i think if we're going to put at risk the markets, i think frankly the time line may be more like the middle of july. it is my hope, mr. president, that the senators from colorado will be joined by senators from both sides of this body and both des of this capitol in crafting a responsible bipartisan solution. mr. udall: the senator, in effect, is saying that rather than this being a problem, although it is, this is an enormous opportunity for the country to chart a new course. if we agree to do it fir and foremost as americans -- not as democrats -- the presiding officer: the senators have spoken collectively for 30 minutes.

mr. udall: we thank the chair for that notification. we look forward to next week continuing this conversation. . president, i want to thank my colleague from delaware for joining myself and senator bennet in this discussion this afternoon. mr. coons: mr. president, i would like to express my gratitude to the senators from colorado for allowing me to join in a little more than an hour, g.o.p. candidate mitt romney on the u.s. economy and jobs. on "washington journal" this morning, we'll discuss the on going budget debate with david keating. and we'll be joined by blanche

lincoln and cornelia orr. "washington journal" is live on c-span every day at 7:00 a.m. eastern. now administrator speaks at the national press club today. live on c-span. the last space shuttle launch is scheduled for friday, july 8. there are three days of book tv programming. eli argues corporations are undermining the original intent of the internet. her new book is demonic. endangering america. that's sunday in-depth with linda hogan. she writes about the responsibility we have for the

environment. sign up for book tv alert, weekend schedules in your inbox. congress passed a law last year substantially lowering sentencing for those convicted of crack cocaine. lowering sentencing guidelines for prisoners already serving time. the commissioner estimates 12,000 inmates in federal prisons will be eligible to have their sentences reduced. this is a little more than an hour.

>> the meeting is called to order. the first order is to adopt the minutes. is there a motion to do so? >> i move. >> is there a second? >> i second. >> any discussions? now we need a vote on the motion. all in favor say i. >> any opposed? the motion carries. now we move on to the matter before the commission today. so good afternoon to everyone. and thank you-all for coming to this important meeting regarding crack receipt trow activity. today's public meeting has been called to vote on whether to apply retroactively the

commission's proposed permanent amendment implementing the fair sentencing act of 2010. let me begin with the statue chute. by statute the commission is required to review and revise the operation of the sentencing guidelines and ensure their conform plans with federal statute. by statute, the commission is also required to consider applying receipt trow actively changes to the guidelines that lower penlts. because of the importance of finality of judgment and the burden placed when the changing of a guideline is applied pretty receipt trow actively, the commission takes this very seriously and doesn't come to a decision of retroactivety

lightly. before the motions regarding retro activety is raised, i want to make some comments on the proceedings and the process that will follow. first, i want to make it clear that we are voting today on the retroactivety of the guidelines only. the commissions cannot make itself retro. so not every crack defendant in custody would see a benefit from retroactivity, because the old statute mandatory minimum would still apply, and second, if the commission decides to give receipt trowactive amendments today, it does not become effective immediately but on the dates set by the commission, provided that the

amendment itself is not disproved or disapproved by congress. that effective date is november 1, 2011. consideration by the court of receipt trowactivity motions would not be proper before such time. and third, if there were an affirmative vote on receipt trow -- retroactivity, that does not mean the prisoners would be able to leave immediately. every defendant who believes he is eligible for retroactivity must have his case considered by a federal judge who will ultimately decide to what extent, if any, a modification of sentence is warranted. that will be directed by the statutory regulations on the moderation proceedings and policy statement covering

retroactivity and the statutory factors. let me tems judges would be required to consider the defendant's risk to public safety as part of their overall consideration of a defendant's motion for a reduced sentence. today is a very important historic day for the commission and national sentencing policy as a whole. the commission has long worked on this issue. hide everybody gather all the reports, the full report we've written on the subject, 1995, 1997, 2002, and 2007. we commissioners have spent the last month since the hearing, reading letters, i think 43,500 and the testimony and reviewing the new issues made by the supreme court appellate and district case law. our excellent staff has literally been working round the clock and the commission is grateful to everyone, probably

all of you sitting around this room who sent in letters or testified regardless of what your position was on this issue, because we want to hear from everyone when we make these important decisions. your views help us make better decisions. there's much more to do and we look forward to making the decisions on the issues before us and my colleagues and i will have more remarks. so now i'd like to get this meeting started with our general council and our first order of business. >> before you propose an amendment 1 b 110 governing retroactivity, first the proposed amendment would exand if listing in the subsection c to include part a and c to amend the part that may be considered for retroactive

sentencing. part a of amendment 750 amended the -- for crack cocaine and -- part c deleted the cross reference if section 2 d 2.1 b under which an offender who possessedless than five grams of crack cocaine was sentenced -- and changing the limitations that applied in reach case in which the term was less than the minimum at the time of sentencing. under the proposed amendment, it continues to be that the court will not reduce the defendant's term if it is less than the proposed. cases involving a government motion trowflect the defendant's substantial -- to tort authority. for those, it may be prorpte.

third, the proposed amendment amends the commentary to 1 b 110 to application issues and when if at all the court applies -- before determining applicable for purposes of 1 b 110. and reflected in 1 b .11 the proposed amendment reflected that the -- is the guideline range pursuant to 1 b 110 considered before determination of any -- or any variance. note 1 b 110 to specify that. and 1 b 111 that is in effect on the date 3582 c the 2 and

finally if it adds to refer to the supreme court case dylan b u.s. a motion to prom you will gate proposed amendment would be in order with the effective date of 20-01-11 and granting staff technical and conforming amendment authority. >> thank you. is there a motion? >> i so move. >> is there a second? >> i second. >> is there a discussion on the motion? ly ask at this point the staff director to call the roll. >> thank you chair sir. the motion described by general council cohen, vice chair car? >> eye. >> vice chair jackson. >> commissioner howl? >> yes. >> commissioner proceed to rick? >> the motion passes unanimously. >> thank you. now at this point, does any

commissioner want to make a statement? commissioner jeff. >> in the sentencing reform act of 1984, congress not only created the united states sentencing commission, it also required the commission to consider retroactive consideration of ghine penalty reduction. title 28 of the united states is not ambiguous. it states, if the commission reduces the term of imprisonmental recommended in the guideline applicable to a particular offense, it shall specify in what circumstances and by what amount the sentence of prisoners serving term for imprisonment for the offense may be reduced. there is a similar degree of definitiveness in the fair

sentencing act of 2010. in that statute, congress reduced the statutory mandatory minimum penalty threshold applicable to crack cocaine offenses among other things and rather than permit the commission to consider whornte making concerneding nines in the ordinary course of its amendment cycle,al congress ordered the commission to make conforming penalty reductions in the guidelines that pertain to crack cocaine, quote, as soon as practicable. we are here today because the commission did just that. it has full filled its statutory duty under the fair sentencing act to reduce the term of imprisonment in the guidelines applicable to crack cocaine offenses, and it now must consider whether those guideline changes should be eligible under the sentencing reform. congressional silence about

retroactivity in the tax of the act tells us nothing as to whether the commission is relieved of its statutory obligation to consider the guideline penalty changes. congress certainly could have addressed that issue. but it did not. so now the commission must do what the sentencing reform act requires. i share the conclusion of my colleagues and as many of you here today that parts a and c of the guideline amendment 750 should be subject to retro action. this conclusion rests on many basis. among them, the testimony that we heard at our public hearing, the thousands of letters and public pieces of written comment we've received on this issue and the analysis of the relevant data and the thorough evaluation of the guideline in the light of the established

criteria by which they make the determination. my view, each of these criteria is fully satisfied. the crack cocaine guideline penalty reduction is not some minor adjustment designed to facilitate efficient guideline operation. but it reflects a statutory change that is fundamentally rooted in -- >> it first identified the myriad of problems that peoplizes crack cocaine users than offenders who track powder cocaine. in a report in 1995. today, there is no federal sentencing provision that is more closely identified with unwarranted despairty and perceived systemic unfairness than the 100-1 crack-powder penalty distinction.

the congress' purpose in requiring it to make immediate reforming reduction in the guideline was to address this fair sentencing issue. the commission also estimates that the substantial number of affected crack cocaine offenders could see a significant change in their sentences, and to a person, the federal official who testified at our hearing about their experience with having administered the -- before, after the crack cocaine guideline was introduced in 2007 said these guideline changes if made retroactive would not be made particularly burdensome. it also bears repeating that there's nothing problematic for anything made under section 1 b 1.10. each eligible cases, a federal

judge must determine the appropriateness of a sentence reduction for at a particular defendant, adjusting the defendant only if warranted, and if the risk to public safety is minimal. and judges have proven that they are up to this task. indeed, more than 35% of the motions for retroactive -- of the crack amendment were denied. sure. many offenders will ask, but we know from experience that not all will receive reduced penalties. when the circuses of their cases are reviewed and the retroactivity analysis is applied. this, in my view, is pro sicely why the justice department's position on retro activity need not be sustained. in this case there's no need to

employ another one when an actual judge with an actual case, can make that call. and so, as you can see, my vote today does not resemi-ible any caricature of a policymaker intent on freing violent felons without congressional authorization and congressional will. rather, it is well supported and well consistent. with the bear sentencing act, prior experience and common sets. the commission has the statutory authority commit ghine penalty reduction. and congress provided that authority to be used if ever the day should come when the retroactivity shows an interest in equitable sentencing and the avoidance of unwanted avoidance of unwanted despairty.